The regulator said it was looking into claims of a "significant slippage" in Thames' investment programme for sewage treatment, underspend on sewer flooding and allegations it has not maintained parts of its wastewater network.

The revelation came just weeks after Thames made an exceptional demand to be able to push up customer bills by 12 per cent or £29 plus inflation next Spring to help balance the books.

Ofwat said it would be looking into the three areas where Thames "has not delivered outputs" for customers as part of its study into whether Thames demand to push up bills was acceptable. A provisional decision is expected next month.

An Ofwat spokesman said: "It may be the case that customers are paying for things that Thames hasn't delivered." The regulator said it would also be looking into whether Thames had "benefited from wider economic circumstances beyond its control".

Water companies such as Thames are heavily regulated and can only increase bills every five years in line with guidelines set by Ofwat, and based around investment and expenditure levels.

Thames last month said it needed a one-off surcharge to cover costs linked to plans for a new 'Super Sewer' in London.

The move sparked fury from watchdogs given it has paid out an estimated £900 million in dividends to its private owners, including investment funds owned by the governments of China and Abu Dhabi, in the past seven years.

In March this year Thames warned that heavy rain could trigger a wave of sewage floods. It claims much of the flooding is triggered by "sewer abuse", where people flushing everything from fats to wet wipes down the loo.

Earlier this week Thames announced plans to invest £26 million in upgrading the Victorian sewer network serving large parts of the boroughs of Hammersmith & Fulham and Kensington & Chelsea in London.

In response of Ofwat's statement today, Thames Water said: "We expected the regulator to set out the format for assessing our application. This is part of the regulatory process.

Earlier this summer, Ofwat chairman Jonson Cox blasted water giants' tax record as "morally questionable". Writing in The Telegraph, Mr Cox said a "good number" of water companies use shareholder loans to reduce their tax liability.